Global oil production is running close to record highs. With more barrels poised to enter the market from nations such as Iran and Libya, the price of crude is set for its largest monthly percentage decline in seven years.

Brent’s premium over U.S. crude narrowed further after President Barack Obama signed a law on Friday that will lift a 40-year ban on U.S. crude oil exports.

The global economy is in the doldrums, and China, the world’s biggest oil importer, appears plagued by structural political and economic problems that it may or may not overcome in the next few years. Energy agencies have therefore lowered global oil demand forecasts.

What usually happens in such circumstances is that Saudi Arabia attacks the supply side — that is, it cuts production to boost prices. But the Saudis have decided (most recently just two weeks ago) not to do so, probably because they believe that low oil prices have still not done enough to undermine the North American energy boom and hurt their nemesis, oil-rich Iran.

(The above blog was written on Dec 21, 2015 and uploaded to this site in Oct 2016)